Corporate Governance COMMITTES

By:Sumanraj

II M.COM (IBM)

CADBURY COMMITTEE• Failure of 1980’s and early 1990’s.• Setup in May 1991.• By the financial Reporting council the

London stock exchange and accountancy profession.

• To address financial aspects of CG.• The committee chaired by Sir Adrian

Cadbury

Content of the report• Reviewing the structure and

responsibility of BOD & recommending code of best practice.

• Considering role of auditor & addressing various recommendations to the accounting profession.

• Dealing with the rights and responsibility of share holder.

Code of best practice• Concerning on role of BOD, duties of

board and composition.• Dealing with the role of the outside

executive directors.• Concerning the executive directors

and their remuneration.• Addressing questions of financial

reporting and financial controls.

Recommendations • All listed company should fulfill

with code.

• Power of non executive should be independent and high quality.

• Improving standard of corporate governance

Recommendations• Highest paid director should be

disclosed in annual report.• Responsibility of board to present

true financial report.• Professional and objective

relationship b/w board and auditor• Encourage the institutional investors.

Greenbury committee• Set up in January 1995 • Chairmanship of Sir Richard Greenbury.• Confederation of British Industry(CBI)• To identify good practice in determining

director’s remuneration.• Final report of group published on 17 July

1995

Recommendations

• Remuneration committee.• Disclosure and Approval provision.• Remuneration policy.• Service contracts and compensation

• Remuneration committee.

set remuneration committee of non-executive director.

Articles of Association should be amended.Non-Executive Directors with no personal

financial interest. Board is determine remuneration of non

executive director.R.C chairman should meet AGM.

• Disclosure and Approval provision.

The remuneration committee should make a report each year

Company’s policy on executive remuneration, performance criteria and measurement, pension provision, contracts of service and compensation commitments on early termination.

Full consideration to the best practice.The report should also include full details of all

elements in the remuneration package of each individual Director.

• Remuneration policyRemuneration committees must provide the

packagesRemuneration committees should be sensitiveEligible for annual bonusesExecutive share options should never be

issued at a discount

• Service contracts and compensation

Remuneration committees should consider what compensation commitments.

Remuneration committees should, however, be sensitive and flexible, especially over timing.

Periods should reduce after the initial period. Remuneration committees should take a

robust line on payment of compensation

Kumara Mangalam Birla Committee

• Set up by the SEBI in the year 2000.

• Clause 49 of the listing agreement.

• Most of the recommendations accepted by SEBI

Recommendations

Recommendations

Mandatory Non-mandatory

Mandatory Recommendations

• Board of Directors. Not less than 50 percent. Independent director. Transaction of non-executive director must be disclosed.

• Audit Committee. A qualified and independent. Shall meet at least thrice in a year.

• Remunerations of directors. Remuneration of Non- executive director shall be decided by

BOD.

Contd.• Board procedure. Meeting shall be held at least four times a year. A director shall not be a member in more than 10 committees, or

act as chairman of more than 5 committees.

• Management To share holder Discloser should made by management to the board.

• Share holders. Must be provided information about Appointment and re-

appointment. Quarterly result. Shareholders/Investors Grievance committee.

NON-MANDATORY RECOMMENDATIONS

• Chairman of the board

• Share holders Right

• Postal ballot

N.R Narayana Murthy committee

• Established by SEBI.• Chairmanship of N.R Narayana

murthy.• To review performance of C.G in India

& make appropriate recommendation.

• Submitted report in Feb 2003.

Recommendations

Mandatory Recommendation• Audit committee.• Risk management.• Proceeds from IPO• Code of conduct.• Directors.• Non-Executive director compensation.• Whistle blower policy.• Subsidiary companies

Non-Mandatory recommendation

• Evaluation of Board performance.

• Training of board member.

• Audit qualification.

THANK YOU